Month: May 2013

JOINT VENTURES FOR CONSTRUCTION PROJECTS IN KENYA.

1. How does the JV work?

A Joint Venture works whereby a land owner does not have the requisite funding enabling him obtain financing from a bank. In most cases, banks require that the land owner fund approximately 30% of the total cost of the project including land and consultancy fees.

Where the cost of land is less than 30% of the total costs, banks require that the land owner top up the difference either using cash or construction input till foundation stage. This top up is what lacks to most land owners. Joint Venture partners come in to assist the land owner reach the required bank minimum of 30% contribution by the land owner.

2. What is the role of the Land owner in JV?

The land owners role in a JV is to avail clean land that has no encumbrances. The Land owner will need to employ consultants who will be able to negotiate with him for a good deal with the JV partner. In most cases, the Joint Venture partner takes a minimum of 51% of the total profits regardless of the contribution.

For example, say the value of the land is 15% of the total construction project cost. The Joint venture partner puts in the other 15% in form of cash so as to reach the minimum bank lending threshold of 30%. In a good Joint Venture negotiation, the Land owner should be able to get the majority percentage of profits even through the contribution between him and the Joint Venture partner is the same.

3. What would be the land owners contribution?

The land owners contribution is clean unencumbered land. We at www.a4architect.com can team up with the land owner to provide consultancy services, namely architectural, structural, quantity surveying, project management. This will push up the land owners contribution so as to enable a better Joint Venture negotiation deal.

4. What is the land owners benefit?

Once construction is through and the property sold, the land owner stands to gain form at least 51% of the profits from the proceeds . Profit is what remains after all costs of construction are added up together. The major costs to construction are
1.Land
2.Statutory fees to Local Authority and N.E.M.A
3.Building construction
4.External works construction eg roads, septic tank, bore hole, fence
5. Architectural, Quantity surveying, engineering, legal and project management fees.
6. Sales agents commissions and advertisement/marketing costs.
7. Bank loan interest repayments.

5. Who is the Joint Venture financier?

Joint Venture financiers are usually local banks. Once the land owner agrees with the Joint Venture partner in terms of the contribution, the Joint Venture partner together with the land owner register a company with each having commensurate percentage of ownership e.g. if they agree on 60 % vs. 40%, then the company ownership will suggest the same. The land owner then transfers the land title to the company.

This means that the land is now co owned the the original land owner together with the potential Joint Venture partner. With the co owned land, they both apply for a construction loan from a bank.
The bank charges the land title as collateral and releases the construction funds. Once construction is through, the original land owner and Joint Venture partner share the profits as per the company registration and the company is finally dissolved.

Francis Gichuhi Kamau, Architect.
www.a4architect.com
info@a4architect.com
0721410684

Francis Gichuhi Kamau, Architect.

LAND PRICES IN NGONG TOWN.

Land price in Ngong is dependent on the distance from Ngong town. Plots within Ngong town sell for 8 to 10m for a 1/8th acre which translates to 70m per acre or 35m per 0.5 acre. Plots 500m from tarmac go for between 4 to 5m per 1/8th which translates to 35m per acre or 18m per half acre.
Plots located 1km from tarmac costs around 2m per 1/8th which translates to 14m per acre and 7m per 0.5acre. Plots located 2km and above from tarmac cost between 1 to 2m per 1/8th which translates to 7 to 14m per acre or 3.5 to 7m per 0.5 acre.

Distance from main Ngong to Nairobi tarmac is the main determinant of price. Distance from Ngong town also affects price with plots closer to Nairobi fetching higher than plots farther away.

Ngong town is approximately 22km from Nairobi CBD.

Distance from large shopping developments such as the Juanco shopping centre also affects land prices.
An upcoming large supermarket development within the Ngong PCEA church land will also affect land prices.
Land in Ngong can be used to construct high-rise buildings.
There are no restrictions to the types of developments that can be constructed apart from the Kerarapon area which borders Karen and is zoned for single family residential use only.
Just like Karen whereby only one house is to be constructed in a minimum land size of 0.5acres, Kerarapon has similar land restrictions, the only difference being the minimum land size of 0.25 acres. Plots here sell for kes 5m per 0.25acres, translating to 20m per acre.

Land in Karen sells for 30 to 40m per acre for residential and 50 to 60m per acre for commercial land near or next to the main tarmac road.

Ngong area neighbors Kibiku, Matasia ,Kerarapon and Karen/Ololua forest.

BUILDING MATERIALS.

There are stone quarries in Ngong Oloolua area , Ongata Rongai Gataka area and Kiserian along Kiserian Isinya road. The Oloolua and Rongai stones are hard and mainly used for the foundation. The kiserian stones are soft and yellow in colour so they are mainly used for superstructure walling and decoration.

WATER.
nogng area has plenty of water from underground reservoirs. various individuals and organisations have sunk boreholes and already have existing water piping networks that serve the water to individual plots.

ELECTRICITY.

Blackouts are quite common during the day and there is power rationing on Thurdays during the day.

Francis Gichuhi Kamau, Architect.
info@a4architect.com

CONSTRUCTING BUILDINGS IN SWAMPY GROUNDS.

Demand for land has led mankind to think outside the box in order to accommodate and build on top of wetlands.
Land around Runda, Kiambu road and Kasarani, near Thika Super Highway is prone to dotted marshlands.

The land value per acre, approximately kes 40m per acre, is quite high.

This means that the extra cost of expensive foundations that can support buildings on top of wet lands will be able to be returned from the rental/sale income of the building. If the land value was low, it would be more prudent to look for alternative land that will not necessitate an increase in foundation costs.

PILE FOUNDATION.

Using Pile foundations is a good way of constructing on march lands. Holes are drilled into the wet ground till solid rock, water drained out and a casing fitted inside to prevent water from entering into the hole.

Steel rebar is then put in place and finally, concrete poured inside. The exterior casing is then removed.
A concrete column is now in place to support the building. Most of the high-rise 20 floors and above buildings worldwide are supported through this method.

COST.

This method requires specialized mechanization and engineering expertise hence there will be a slight increase in the foundation construction costs compared to other normal foundation methods such as the common strip foundation method.

The returns on investment will be eventually realized since the cost of pile foundations is very minimal compared to the cost of land and rental/sale value of the complete building.

Francis Gichuhi kamau, Architect.
info@a4architect.com
0721410684

RUNDA KIAMBU ROAD HOUSING ESTATE
GREEN ARCHITECTURE CONCEPT.

84 units have been conceptualized. To increase the greenery footprint, the following will be incorporated in the design.

1. Underground car park.

The plinth area below the ground floor will be designed into an underground car park. To save on light and ventilation costs, the underground car park will be raised 1 m above the ground level so as to allow for natural light and ventilation.

2. Roof garden.

The green plinth area occupied by the built up space will be replaced by a roof garden of the same plinth area size.

3. Wall planters.

The architectural design will strive to achieve approximately 40% of wall surface to be covered by green plant material designed into an aesthetically appealing pattern.

This will increase the green foliage cover and reduce the concrete jungle feel, thereby increasing project value.
A 200m2 ground floor useable space, including the car park will be achieved in the design.

SPACE SAVING.

The typical 1/8th plot has a surface area of approx. 430m2. A typical residence within such a plot will occupy the ground surface by approx. 130m2. This leaves out a total green space of 300m2.

In this project, we have designed the unit to incorporate 200m2 of useable ground level space plus a further 50m2 of roof top green garden , bringing the total green space to approx. 250m2. This is close to the available space achieved by the typical 1/8th acre plots. The actual space offered is 1/16th acre while the output green space offered is close to the effective space achieved on a 1/8th acre space.

By utilizing a slender, vertical space with 3 to 4 levels, including underground parking, we are able to offer the house occupants with green surface area nearly equivalent to space offered by 1/8th acre plots yet the overall space is actually 1/16th acre.

Francis Gichuhi Kamau, Architect.
info@a4architect.com
0721410684